Correlation Between Alliance Fiber and Advanced Analogic

Can any of the company-specific risk be diversified away by investing in both Alliance Fiber and Advanced Analogic at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alliance Fiber and Advanced Analogic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alliance Fiber Optic and Advanced Analogic Technologies, you can compare the effects of market volatilities on Alliance Fiber and Advanced Analogic and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alliance Fiber with a short position of Advanced Analogic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Fiber and Advanced Analogic.

Diversification Opportunities for Alliance Fiber and Advanced Analogic

0.0

Correlation Coefficient

Alliance Fiber  Advanced Analogic

Pay attention - limited upside

The 3 months correlation between Alliance and Advanced is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Fiber Optic and Advanced Analogic Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Analogic and Alliance Fiber is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alliance Fiber Optic are associated (or correlated) with Advanced Analogic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Analogic has no effect on the direction of Alliance Fiber i.e., Alliance Fiber and Advanced Analogic go up and down completely randomly.

Pair Corralation between Alliance Fiber and Advanced Analogic

If you would invest  0.00  in Advanced Analogic Technologies on January 19, 2024 and sell it today you would earn a total of  0.00  from holding Advanced Analogic Technologies or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alliance Fiber Optic  vs.  Advanced Analogic Technologies

Alliance Fiber Optic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliance Fiber Optic has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Alliance Fiber is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Advanced Analogic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Analogic Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Advanced Analogic is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Alliance Fiber and Advanced Analogic

The main advantage of trading using opposite Alliance Fiber and Advanced Analogic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Fiber position performs unexpectedly, Advanced Analogic can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Advanced Analogic will offset losses from the drop in Advanced Analogic's long position.

The idea behind Alliance Fiber Optic and Advanced Analogic Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.